Tuscany v. Western States ex. Pipe & Boring, 03CA0999.

• Decision Date: 11 August 2005
• Docket Number: No. 03CA1852.,No. 03CA0999.,03CA0999.,03CA1852.
• Citation: 128 P.3d 274
• Parties: TUSCANY, LLC, a Colorado limited liability company; and BCORP Tuscany, LLC, as nominee, a Colorado limited liability company, Plaintiffs-Appellees, v. WESTERN STATES EXCAVATING PIPE & BORING, LLC, a Colorado limited liability company; and Frontline Equipment & Trucks, LLC, a Colorado limited liability company, Defendants-Appellants.
• Court: Colorado Court of Appeals

128 P.3d 274

TUSCANY, LLC, a Colorado limited liability company; and BCORP Tuscany, LLC, as nominee, a Colorado limited liability company, Plaintiffs-Appellees, v. WESTERN STATES EXCAVATING PIPE & BORING, LLC, a Colorado limited liability company; and Frontline Equipment & Trucks, LLC, a Colorado limited liability company, Defendants-Appellants.

No. 03CA0999.

No. 03CA1852.

Colorado Court of Appeals, Div. II.

August 11, 2005.

Certiorari Denied February 6, 2006.

COPYRIGHT MATERIAL OMITTED

Jorgensen, Motycka & Lewis, P.C., Gerald L. Jorgensen, Theodore J. Finn, Greeley, Colorado, for Plaintiff-Appellee Tuscany, LLC.

Holland & Hart, LLP, David S. Prince, Susannah W. Pollvogt, Douglas A. Karet, Denver, Colorado, for Plaintiff-Appellee BCORP Tuscany, LLC.

Shughart, Thomson & Kilroy, PC, D.J. Poyfair, Bennett L. Cohen, Denver, Colorado, for Defendants-Appellants.

WEBB, J.

In this action under the Spurious Liens and Documents statute (SLD statute), § 38-35-201, et seq., C.R.S.2004, defendants, Western States Excavating Pipe & Boring, LLC and Frontline Equipment & Trucks, LLC, a related entity (collectively Western States), appeal the trial court's judgment discharging and releasing their mechanics' liens and its order awarding attorney fees in favor of plaintiffs, Tuscany, LLC (Tuscany) and BCORP Tuscany, LLC (BCORP). We conclude mechanics' liens are excluded from the SLD statute, and therefore we reverse.

Western States performed work on Tuscany's housing development. BCORP bought lots in the development for resale. When a payment dispute arose with Tuscany, Western States served a notice of intent to file mechanics' liens.

Tuscany disagreed that it owed any amount to Western States. Nevertheless, to resolve the dispute and close on financing, Tuscany orally promised to pay Western States $704,540.98 immediately on its execution of a lien waiver and an additional $617,000 from the proceeds of a loan that Tuscany expected to close in the near future. Western States executed a "Final Release and Waiver of Lien" that cited the $704,540.98 payment as consideration, which was then disbursed to Western States.

Several months later, Western States filed mechanics' liens against the development because Tuscany had not made the second payment. In response, Tuscany brought this action challenging the liens and requested a show cause hearing under § 38-35-204, C.R.S.2004. Although BCORP had commenced a separate action, the trial court allowed it to join in Tuscany's request for a hearing. Thereafter, the court entered the same orders in both cases.

Following a three-day hearing, the trial court found, with record support, that Tuscany had substantially complied with its obligations under the waiver and that, when Western States filed the mechanics' liens, it "had knowledge that [its] claims for mechanics' liens had been waived." The court also found "no evidence to support" Western States' primary defense that, because Tuscany knew that it would not be able to pay the additional $617,000, Tuscany had fraudulently induced the waiver. The court noted that, when Western States executed the waiver, it "was taking a risk" of partial nonpayment because "the other loan wasn't assured."

The court concluded that the mechanics' liens were groundless because of Western States' waiver and therefore discharged the liens as "spurious documents" under § 38-35-201(3), C.R.S.2004. The court also held that Western States was estopped from asserting the waiver was invalid.

In a subsequent hearing under § 38-35-204(1)(c) and (2), the court awarded costs and attorney fees to both Tuscany and BCORP.

I.

Western States first contends mechanics' liens cannot be "spurious liens" because § 38-35-201(4)(a), C.R.S.2004, excludes from the definition of "spurious lien" any lien provided for by a specific Colorado statute, and mechanics' liens are governed by the General Mechanics' Lien statute, § 38-22-101, et seq., C.R.S.2004. According to Western States, because such liens cannot be challenged as spurious liens, the trial court erred in allowing them to be challenged under the SLD statute as "spurious documents." We agree.

A.

We review an issue of statutory construction de novo. Vigil v. Franklin, 103 P.3d 322 (Colo.2004).

In construing statutes, our primary duty is to give full effect to the intent of the General Assembly. Vigil v. Franklin, supra. We look first to the language of the statute to determine legislative intent, giving effect to every word and reading words and phrases in context. Colo. Water Conservation Bd. v. Upper Gunnison River Water Conservancy Dist., 109 P.3d 585 (Colo.2005).

If the statute is unambiguous, we look no further. Hensley v. Tri-QSI Denver Corp., 98 P.3d 965 (Colo.App.2004). We rely on statutory construction principles only when the statutory language is ambiguous. Coffman v. Colo. Common Cause, 102 P.3d 999 (Colo.2004).

We construe a statute as a whole in order to give "consistent, harmonious, and sensible effect to all its parts." Bd. of County Comm'rs v. Costilla County Conservancy Dist., 88 P.3d 1188, 1192 (Colo.2004). We avoid constructions that render any part of a statute meaningless, In re Estate of Hall, 948 P.2d 539 (Colo.1997), that create a conflict between statutes, Lobato v. Indus. Claim Appeals Office, 105 P.3d 220 (Colo.2005), or that lead to an illogical or absurd result. Colo. Water Conservation Bd. v. Upper Gunnison River Water Conservancy Dist., supra. We recognize that "[s]pecific terms prevail over the general in the same or another statute." Martin v. People, 27 P.3d 846, 852 (Colo.2001)(quoting Clifford F. MacEvoy Co. v. United States, 322 U.S. 102, 107, 64 S.Ct. 890, 894, 88 L.Ed. 1163 (1944)).

If statutory language permits alternative constructions, we may also consider the legislative history to determine its purpose. L.E.L. Constr. v. Goode, 867 P.2d 875 (Colo. 1994); see also § 2-4-203, C.R.S.2004. We then construe the statute to serve the legislative purpose underlying its enactment. Coffman v. Colo. Common Cause, supra.

B.

Section 38-35-201 provides in relevant part:

(2) "Lien" means an encumbrance on real or personal property as security for the payment of a debt or performance of an obligation.

(3) "Spurious document" means any document that is forged or groundless, contains a material misstatement or false claim, or is otherwise patently invalid.

(4) "Spurious lien" means a purported lien or claim of lien that:

(a) Is not provided for by a specific Colorado or federal statute or by a specific ordinance or charter of a home rule municipality. . . .

We begin by noting that, as a practical matter, to encumber record title to real or personal property a lien must be represented by a document. Because the definition of "spurious document" includes "any document," the definition would embrace all liens. See Hall v. Walter, 969 P.2d 224 (Colo.1998)(giving effect to the ordinary meaning of the term "any" results in an expansive definition of "any person" under § 6-1-113, C.R.S.2004). Thus, this definition would allow invalidation of a mechanics' lien as a "spurious document."

Nevertheless, because mechanics' liens are "provided for by a specific Colorado . . . statute," all such liens are excluded from the definition of "spurious liens" by § 38-35-201(4)(a) and therefore they cannot be invalidated on that basis. Moreover, the definition of "spurious documents" does not refer to liens, and the definition of "lien" does not refer to documents.

Hence, we discern two possible interpretations of the SLD statute's plain language. Under one interpretation, which the trial court applied, a lien that is not within the definition of a "spurious lien" may still be challenged as a "spurious document." Under the other interpretation, which Western States urges, a lien may be challenged only if it is a "spurious lien." Because the statute is susceptible of these differing interpretations, we turn to its legislative history.

A spokesperson for the legal community testified that the SLD statute's purpose was to address the "very serious problem" of groups "who are disgruntled with the American — present American system of government" filing "phony documents and liens against public officials' property." Later, when discussing the applicable time frame for bringing an action to enforce a lien, Willis Carpenter, the primary drafter, testified that "a mechanics' lien comes under the exception of a lien created by statute, so a mechanics' lien would not be affected by this statute at all." Hearings on H.B. 1143 before the Senate Judiciary Committee, 61st General Assembly, 1st Session (Feb. 17, 1997). Thus, the legislative history supports the interpretation that mechanics' liens are not subject to challenge under the SLD statute.

Principles of statutory construction also favor this interpretation. Specific terms prevail over general terms. Martin v. People, supra. Within § 38-35-201 of the SLD statute, subsection (2) defines "liens" and subsection (4) uses this word in defining "spurious liens." In contrast, subsection (3), which defines "spurious documents," does not use the word "lien." Thus, when challenging a lien, the more specific provision — subsection (4) — should prevail over the more general provision — subsection (3).

We must also avoid an interpretation that creates a conflict between two statutes. Lobato v. Indus. Claim Appeals Office, supra. If a mechanics' lien can be a "spurious document," then a conflict would exist regarding the length of time such a lien can hold property without commencement of an enforcement action. The General Mechanics' Lien statute provides that a lien can hold property for six months after the "last work or labor is performed, or laborers or materials are furnished, or after the completion of the building, structure, or other improvement," within which an enforcement action must be commenced. Section 38-22-110, C.R.S.2004. The SLD statute...